Goodbye BA - over 99pc of shareholders vote for merger

British Airways shareholders have overwhelmingly approved the £5.7bn all-share
merger with Spanish carrier Iberia in a vote that should lead to the
creation of a European airline with almost £12bn of annual sales.

Iberia's shareholders also voted in favour of the merger to create International Airlines Group (IAG).Photo: PA

By Alistair Osborne

12:43PM GMT 29 Nov 2010

At a thinly attended shareholder meeting in London, BA chairman Martin Broughton disclosed that more than 99pc of the airline's investors - including proxy voters - had approved the deal.

Iberia's shareholders also voted in favour at a reciprocal meeting in Madrid to create International Airlines Group (IAG) - a carrier mixing BA's strengths on the North Atlantic with Iberia's in Latin America, operating a combined fleet of 406 aircraft, carrying 57.5m passengers a year.

A Madrid-registered holding company - International Consolidated Airlines Group - will sit above IAG, which will be headquartered in London, and own the BA and Iberia operating companies. They will preserve their brands, national indentities and flying rights.

Willie Walsh, the BA chief executive, will take the same role at IAG - whose name will replace BA's on Stock Exchange screens when the merged company's shares begin trading on January 24.

Despite the resounding vote in favour, there was some dissent from the floor of the QE2 conference centre in Westminster, where only about 80 shareholders showed up.

John Farmer, a stalwart at shareholder meetings, accused the board of making a "tactical error" in agreeing to a corporate structure that ensured that all IAG investors meetings were held in Madrid - making today's the last such reunion in the UK for BA shareholders.

Martin Broughton, BA chairman, hit back saying that by conceding the Madrid registration the deal satisfied Iberia's demands that the deal appeared to be a merger, not a takeover by the UK airline. In a takeover, Mr Broughton suggested, Iberia would have demanded a "premium", leaving BA shareholders with less than the 56pc of the combined group than they now have.

"I think it's better to have the operational HQ in the UK and tax residence in Spain than vice versa," Mr Broughton added.

Asked by another shareholder if he was satisfied that it was the "right time to have a merger" with Iberia, given Spain's economic problems, Mr Broughton replied with the one word answer: "Yes."

Some employee shareholders questioned how BA could push ahead with the deal while it was still in dispute with its cabin crew. "This dispute is an entirely BA issue. It's not affected by the merger," Mr Broughton said.

Cabin crew union Unite is expected to make an announcement this afternoon, which many believe will be a call for a further strike ballot.

After the meeting Mr Walsh reiterated his belief that IAG would be a vehicle for further consolidation in the airline industry, though had nothing to add to his surprise comments in September that he had drawn up a list of 12 prospective takeover targets.